5G as an innovation platform

Written by PA Consulting on 26 February 2019 in Sponsored Article

Sponsored Article

PA Consulting on how 5G network slicing will create a 5G service platform

Every year, the world’s mobile industry gathers in Barcelona for Mobile World Congress (MWC). What was once a relatively small event, MWC now hosts an industry that connects five billion people and generates over $1 trillion in revenues. And this year, 5G is set to dominate the show’s agenda.

Mobile has driven global technological and sociological change, with mobile networks today recognised as critical national infrastructure essential to modern digital economies. But while network operators have been busy building the infrastructure, they’ve struggled to innovate and create the same levels of value as the digital tech companies. Faced with slow growth, commoditisation and global value chains, the operators are hoping the introduction of 5G will spur innovation opportunities.

5G can act as a platform for new digital services, providing an opportunity for operators to address business change.

With 5G network slicing, operators can give different slices of the network to different organisations. This has the potential to transform the network into a service platform that supports multiple industries with services that have varying network quality and context-awareness. For example, an autonomous car might rely on V2X (vehicle-to-anything) communication, which requires low latency but not necessarily a high throughput. Meanwhile, a video stream watched from inside the moving car would require a high throughput and be susceptible to latency. Both these services could be delivered over the same physical network on virtual network slices, optimising the use of the infrastructure.

This 5G Service Platform provides an opportunity for operators to deliver new and exciting digital services into enterprise segments where most of their future 5G growth could emerge.

Network operators need to embrace open innovation

To become true digital service providers, operators will need to transition from ‘closed’ to ‘open’ innovation models. This means moving from homegrown inventions created by internal telco Research and Development (R&D) teams and network vendors to an ecosystem where new ideas come from outside the traditional mobile industry. One growing success story for open innovation is the open source software development movement, which lets the community of developers crowdsource new ideas from global ecosystems of motivated and talented colleagues.

We saw closed innovation with 2G and 3G, where the mobile industry developed text messaging and video calling. And we began to see the power of open innovation with Apple’s iPhone app store and the emergence of open source software, which both successfully harnessed the creativity of the wider developer community. To make the transition from closed to open, operators must listen and engage with many sources of innovation, from academia and start-ups to incumbent organisations.

The recent deal that will see Vodafone and IBM partner on cloud and artificial intelligence services connected by 5G is one example of how two large organisations can embrace open innovation. While Verizon has announced a $1m funding opportunity for 5G start-ups.

While these are new initiatives in telecoms, we’ve helped organisations in a range of sectors embrace open innovation. We worked with a major metropolitan transport provider to design a strategy for engaging market innovators, for example. The strategy ensures the organisation gets the most value from start-ups, academic institutes, suppliers and corporate partners. We also helped a waste and recycling board design and launch an innovation hub that accelerates circular economy start-ups.

Organisational agility will enhance open innovation

5G will have uses we’re yet to imagine, but collaborating with industries and start-ups provides an open way to create and test new ideas quickly. The challenge for operators is having the culture, processes, mindset and skills to successfully work with organisations outside their typical network suppliers. Many have a legacy of complex bureaucracy and hierarchical organisational structures, which slows their decision making and time to market.

In Europe, WhatsApp has claimed the mobile messaging market and Rich Communications Services (RCS), the operators’ evolution of SMS to IP messaging, has taken far too long to launch. Operators need to become more agile and give their employees the freedom to adapt and experiment.

This means they must centre on the customer, testing products with them as soon as they’re demonstrable and getting regular feedback. They must embrace agile product and service development, using an iterative approach that involves customers to reduce risk and speed up time to market. And they must emphasise a culture of teamwork, particularly across functions, and encourage experimentation. Our research shows this kind of organisational agility drives top-tier performance.

5G provides the opportunity for operators to become more technologically agile. Through Software Defined Networks and Network Functions Virtualisation, operators can deliver more network functionality through software and have multiple network capabilities on the same piece of physical hardware. This will let operators simplify their networks and reduce cost, but they won’t reap the full benefits until they can combine their technological agility with organisational agility.

It's an exciting time for the mobile industry and we’ll see many announcements about 5G at MWC. Operators must grab the opportunity of this new technology, viewing it as a chance to rebuild their innovation capability through business change rather than just another shiny, bigger, faster toy.

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